What did pending home sales look like in September?
Pending home sales picked up 1.9% in October as lower borrowing costs and ample home supply provided buyers with a late-season boost. Contract signings were down 0.4% year-over-year nationally. Mortgage rates fell through the month of October, landing below 6.2% by the end of the month, the lowest level in roughly a year. Falling rates and stable home prices meant that buyers won back some buying power, creating opportunities for home shoppers in the prime window for buyers.
Regional housing conditions continue to diverge. Pending home sales rose from September in the Midwest (+5.3%), Northeast (+2.3%), and South (+1.4%), but slipped in the West (-1.5%). The South (+2.0%) and Midwest (+0.9%) also posted year-over-year increases in contract signings. In the South, rising inventory and softening prices improved affordability and strengthened buyers’ negotiating power. By contrast, the Northeast and Midwest still face tight inventory, elevated competition, and strong demand for affordable, well-located homes. Even so, gradually improving inventory this fall provided a lift to much of the country.
What does this mean for buyers, sellers, and the housing market?
Pending home sales, or contract signings, measure the first formal step in the home sale transaction, namely, the point when a buyer and seller have agreed on the price and terms. Pending home sales tend to lead existing home sales by roughly one-to-two months and are a good indicator of market conditions. August’s uptick in pending home sales led to the October increase in Existing Home Sales, which marked the fourth consecutive year-over-year gain. This momentum reflects the tailwinds of easing mortgage rates and gradually improving home supply. Buyers who have been waiting on the sidelines may find renewed opportunities to secure a home before year end, particularly in markets with ample inventory where sellers are more willing to negotiate.
